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What are the 'Paradise Papers' and why should you care?

The leak is a trove of 13.4 million files taken mostly from the offshore law firm, Appleby.

06 Nov 2017 12:56 GMT

Little more than a year after the "Panama Papers" leak, the "Paradise Papers" are shedding light on who is investing huge amounts of money in offshore tax havens.

What are the so-called Paradise Papers?

The leak is a trove of 13.4 million files taken mostly from the offshore law firm, Appleby.

The files were leaked to Suddeutsche Zeitung, the same German newspaper that took hold of the Panama Papers in April, 2016.

About 100 different media outlets worldwide are poring over the details.

"There's a new global industry that caters to money that moves around the world," Drew Sullivan, a journalist with the International Consortium of Investigative Journalists (ICIJ), told Al Jazeera. "This money moves through tax havens and it's moved to evade taxes to hide assets, to steal money.

"It's used by organised crime; it's used by large businesses."

What has been discovered so far?

Day one of the disclosures, Sunday, revealed that some big names are involved - among them 120 politicians.

Donald Trump's Commerce Secretary Wilbur Ross has been named.

"[He] has a stake in a shipping firm that receives millions of dollars a year in revenue from a company whose key owners include Russian President Vladimir Putin's son-in-law and a Russian tycoon sanctioned by the US Treasury Department as a member of Putin's inner circle," said a report in the ICIJ, which received the leak from the German newspaper.

On Monday, Ross told CNBC that it was "totally wrong" he did not disclose the links.

Commerce Secretary Wilbur Ross has been named in the 'Paradise Papers' [File: Brendan McDermid/Reuters]

Stephen Bronfman, Canadian Prime Minister Justin Trudeau's friend and adviser, is reported to have used offshore havens to avoid tax at home.

"The disclosures are likely to generate political heat for the Canadian premier, who swept to power in October 2015 partly on his promise to tackle economic inequality and take on tax avoidance," reported Britain's Guardian newspaper, which was among the media organisations which received the leak.

The Duchy of Lancaster, the private estate of the UK's monarch, is also allegedly involved. The estate of Elizabeth II invested millions of dollars in medical and consumer loan companies, the files show.

While the estate's finance officer said in a statement that the "Duchy was aware" the fund was run offshore, the ICIJ said that it has "never disclosed details of its investments".

The Indian Express reported on Monday that the leak "reveals trails of India's corporates".

"India ranks 19th in terms of the number of names. In all, there are 714 Indians in the tally," said the newspaper, which received details of the leak.

Actor Amitabh Bachchan is said to have been a shareholder in a Bermuda-based company, which no longer exists [Tim P. Whitby/Getty Images]

Aside from the companies, the newspaper said Bollywood star Amitabh Bachchan and the wife of actor Sanjay Dutt were involved.

Bachchan was a shareholder in a Bermuda-based digital media company, which is now closed.

The law firm Appleby insists there is no evidence of wrongdoing.

Why should anyone care?

While, in most cases, putting your money offshore and outside of your country's financial regulations is legal, many argue hiding from the tax man is unfair. Critics say governments have been slow to deal with it.

The amount of money involved is huge. Boston Consulting Group estimates $10 trillion are held in these offshore financial centres.

Most of us know them as tax havens, but few of us actually use them. That's because around half of that $10 trillion sum is concentrated not in the rich, but in the mega-rich. Think 0.001 percent of households.

But it is more than inequality and a lack of fairness. The offshore financial system is incredibly secretive - enabling the wealthy and powerful to hide their dealings and break the law.

"It's very difficult when somebody's using five or six different offshore jurisdictions to get a true picture of what they're really doing," said Sullivan, a journalist with the ICIJ. "And countries need that because law enforcement is not easy to cross borders, but crime can cross borders."

Leader of Britain's Labour Party Jeremy Corbyn also criticised tax avoidance, promising that if his party wins the next election it would clamp down on tax havens and end loopholes.

The reason our country is in a mess isn't because of immigrants. It's because over £100bn per year is lost in tax havens. #paradisepapers